0% CGT rate for reinvestment

Draft legislation has now been published to confirm that, for 2012/13, where capital gains are reinvested into SEIS shares in that year, the investor can claim exemption from CGT.

This means that if an individual makes a capital gain of £100,000 and invests that amount into SEIS shares he will obtain total tax relief of £78,000, comprising a CGT saving of £28,000 and income tax relief of £50,000.

Where part of the gain is reinvested into SEIS shares, part of the gain will be exempt from CGT corresponding to the amount invested into SEIS shares.

If SEIS relief is withdrawn in whole or in part, the capital gain (or an appropriate proportion) will come back into charge in 2012/13.

Where:

  • CGT relief has been claimed;
  • SEIS shares are transferred between spouses or civil partners (so that relief is not withdrawn on transfer); and
  • SEIS relief is subsequently withdrawn

the exempted capital gain will again come back into charge but this time on the transferee spouse rather than on the person who made the original gain.

The relief is available only for gains and reinvestments that take place in 2012/13. Individuals wishing to take advantage of this relief will need to consider the timing of the disposal of assets (particularly where entrepreneurs’ relief is not available).

Click here for further details of the SEIS.

For further assistance on the proposed relief contact TaxDesk on 0845 4900 509 and ask for Paula Tallon or Paul Howard